Burn the churn

5 Min Read

The new standard for customer health (Burn the Churn – Clone)

Similar to the multi-billion dollar health and wellness industry, the SaaS industry goes through its own fads and trends. Some stick, others don’t.

But one thing remains constant: Customer relationships are complex. In order to reduce that complexity and quantify the components of the relationship, we create customer health models to help us predict what’s next and drive action.

But what happens when the complexity of customer relationships becomes even more, well, complex?

That’s exactly what happened two years ago. And just like that, customer health models were never the same. Because when the whole world stops, that’s when you have to start (re)thinking.

New market, new customer health scores

Things changed rapidly when Covid-19 hit. CS teams around the world had to mobilize to quickly respond to changes in a volatile market. It was outside of any previous scope, like running a marathon when you’ve trained for a 5k.

This meant that customer health scores were turned on their heads. The usual data points and customer sentiment went out the windows. How the heck could anyone accurately assess how healthy an account was at this point in time?

Normally, you’d look at feature adoption, usage, engagement levels, and other data points to get a good idea of customer health. But none of these indicators tell you anything about the company’s ability to operate.

That meant that customer health models had to evolve – and do so fast.

Volatility metrics

In an unstable market (read: unstable world), new questions will arise often, sometimes daily. Not only will you have to deal with constant change, you also have to plan for constant change. Which, of course, sounds pretty 1. difficult, and 2. counter-intuitive. 

Data analytics company Mode, put together data from three different categories to account for the new environment they were operating in when covid hit:

  1. Firmographic
  • How much exposure do individual customers and segments have to the current or changing economic environment?
  • What risk exists in the company’s overall revenue given firmographic data?
  1. Account
  • How engaged is this customer with the company and its products?
  • What measurements of value are most impactful?
  1. Product usage
  • Are customers using the product differently? If so, what does that look like?
  • How does usage impact retention and revenue in the current economic environment?

So just like the world had to adjust, so did the way we had to assess customer health scores. But what does this mean in the long term? Do we just add another layer of segmentation using additional firmographic attributes? Or do we constantly need to operate with the possibility of another knock-out around the corner?

A new standard for monitoring, assessing, and improving customer health scores

Pay attention to changes
Now, changes might not apply to everyone the same. Changes that affect you may not affect your customers, and vice versa. That’s why being aware of changes in your customers’ markets as well as external economic factors while paying close attention to what your customers do and say is key to understanding what’s going on.

It’s not about you
Health scores are all too often based on criteria that the company cares about, rather than what the customer cares about. This is a frequent pitfall for SaaS companies. We create vendor-focused customer health scores to make sure that we’re doing the right things, instead of making sure that the customer is on the right path. And what happens when we stop seeing things through the lens of the customer? Churn.

Leverage the right data
As CS orgs are becoming more and more data-driven, we’re also running the risk of drowning in data. You don’t want to calculate metrics that don’t impact churn. Knowing what to measure is half the battle. (We’ll talk about this Week 2! If you haven’t signed up for the challenge yet, head this way.)

Stephen Horning, VP of Customer Success at Pantheon Systems stresses that knowing your account health is more crucial than ever in 2022. “Cleaning up our data and developing better account health scores are a key initiative to better understand when, where, and how we need to act on our accounts. It is orders of magnitude easier (on the team and customer) to proactively fix an account vs trying to save an account at renewal.”

Increase Time to Value with digital-led strategies
Sure, a dedicated CSM for every account would be ideal. But the truth of the matter is, that’s not affordable. That’s where Digital Customer Success comes into the mix. In an effective digital-led strategy, automation delivers content that helps customers get more value from your product by facilitating personalization and driving engagement.

Renewal operations require CS operations
As Customer Success is gaining more influence over revenue and even new business decisions, they need more hands on deck to help understand what it takes to keep customers happy. The answer? CS ops. Just like any other ops team, CS ops are there to make sure that day-to-day business runs smoothly. For CS specifically, this could mean handling your CS platform and drawing on data and insights from various platforms. In short, better CS means better data, deeper insights, and better visibility of customer health.

Investing in better (not more) tooling
Sure, CS tooling might lag a few years behind the tools sales, marketing, and other departments get to enjoy, but this is quickly changing. From better data and analytics to CS and community platforms – we’re making strides. Our advice? Bring on new tooling and experiment. Figure out what works for your CS org in terms of giving you the signals you need for customer health. Invest in the right software for you, not what everyone else is investing in.

Ready to improve your customer health scores? 
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